Angiotech says Quill wound closure product line to propel future revenues
Published Monday November 9th, 2009
VANCOUVER, B.C. - Angiotech Pharmaceuticals Inc. (TSX:ANP) is counting on increased sales of its Quill wound closure product line to propel future revenues, predicting it will be No. 2 in its market by the end of 2011.
"We think we have something pretty special here. This product gets a lot of love and attention in the company," William Hunter, president and CEO of the Vancouver-based medical-device company, said Monday.
Angiotech's goal is for Quill's annual revenues to surpass US$100 million within a few years.
"While we are still small on paper, I would suggest that our execution ability and our game plan here is as sophisticated as any you would find at any major company," said Angiotech chief financial officer Tom Bailey.
In August, Angiotech launched a series of Quill products specifically designed for procedures such as hysterectomies and myomectomies, both surgical procedures involving the uterus.
Angiotech is also pinning its hopes on increased sales of its Vena Cava filter - a device implanted in heart patients to prevent blood clots - as well as its catheter products.
"This company has never had a $20 million brand. We think we will have perhaps three or more of them next year and as we go into 2011, " Hunter told investors during a conference call to discuss the company's third-quarter financial results.
Angiotech said revenues dropped nearly eight per cent in the July-September period to US$63.2 million, from US$68.4 million a year ago. The company reports in U.S. dollars.
Sales were dragged down by a 29-per-cent year-over-year drop in royalty revenue from its Taxus drug-coated stent used in heart surgery to prop open coronary arteries. The product is sold by its Taxus partner Boston Scientific Corp. (NYSE:BSX).
Revenues in its base medical products division - which includes ophthalmology, biopsy and general surgery medical device components sold to third-party medical device manufacturers - fell four per cent compared to last year.
Hunter said that its business was hit by the economic downturn, but is stabilizing.
Meantime, sales in Angiotech's proprietary medical products sector - which includes Quill and its Vena Cava filter - rose 33 per cent year-over-year.
Net product sales in the quarter were $48.7 million, 30 per cent of which came from proprietary medical products and the rest from base medical products.
Hunter said the proprietary medical products part of the company "is not a trivial business anymore."
"It's making up for other issues in the business ... and it has a number of brands now that I think have to be considered legitimate threats in the fields that they operate in," he said.
That growth comes alongside continued falling sales for its Taxus, which was a huge success for Angiotech and its partner Boston Scientific (NYSE:BSX) until concerns emerged in 2006 that drug-coated stents carry a higher risk of rare instances of potentially fatal blood clots.
Its market share has also been eroded in recent months by new competitors.
"By the end of 2010 ... our other growing revenue sources will ultimately make the taxus discussion a footnote in our history, at least from a financial point of view," Bailey said.
Angiotech also said every dollar the company earns is being invested in its products and grow its brands.
"We aren't accumulating cash. We are basically eating what we kill," Hunter said.
"We aren't going to do that forever ... but right now every dollar that we can spare is being invested in our growth initiatives."
Angiotech's third quarter loss was $7.8 million or nine cents per share.
That compared to a loss of $622.4 million or $7.31 a share in third quarter of 2008, when the company wrote down the value of its goodwill assets by $612.9 million from its 2006 purchase of devices company American Medical Instrument.
After adjustments to exclude certain non-cash and non-recurring items, Angiotech said it earned $72,000 or nil cents per share. Adjusted revenue for the quarter remained flat at $63.2 million.
"The business is not exactly where it needs to be," Hunter said.
"But I think over the last four quarters we've made a heck of a lot of progress."
The company's shares were trading down two cents at $1.47 on the Toronto Stock Exchange Monday.
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